Why is this chart on Medicare Advantage market share interesting to insurers?

  • One-third of Medicare beneficiaries were covered by private plans in 2017 according to the Centers for Medicare and Medicaid Services.
  • By 2020, half of Medicare beneficiaries or 38 million people are expected to be in Advantage plans.
  • “11,000 baby boomers age into Medicare eligible population every day,“ says Anthem CEO Gail Boudreaux.
  • New U.S. Secretary of Health and Human Services, Alex Azar, has spoken favorably about Medicare Advantage, and the budget passed by Congress in early February 2018 helps insurers offering these plans to seniors.
  • “Medicare Advantage enrollment will grow at high single-digit rates for the next five years,” forecasts Andrew Kadar, Managing Director of L.E.K. Consulting Healthcare Services segment. Confirming this forecast between 2016 and 2017 MA enrollment grew by 8% or 1.4 million beneficiaries.
  • A UBS Survey found that only 12% of Medicare Advantage enrollees changed plans in 2017 while 39% of Medicare eligible enrollees changed Affordable Care Act plans.
  • Both Obamacare and Medicare Advantage give consumers assistance in buying a health plan of their choosing. But under Medicare Advantage the government picks up much of the cost, ensuring a steady revenue stream for insurers. Bloomberg reported that plan premiums, which are largely paid for by the government, average almost $1000 a month.

All of these statistics make Medicare Advantage one of the few areas of expansion in an otherwise stagnant industry. Its popularity could insulate insurers from Washington caprice: Seniors are a powerful voting bloc, so margin-threatening political changes are less likely than in businesses like Obamacare. “There’s just a real strong overall value proposition with Medicare Advantage,” Steven Nelson, CEO of United Health’s insurance operation, told investors. “We’re seeing that not only just with the folks we serve, but as we talk to policymakers, too, there’s really strong support for it.”

Opportunities for insurers to increase their Medicare Advantage penetration exist. Half of all states have only 30% of their Medicare beneficiaries enrolled in private plans while six states (CA, HI, FL, MN, OR and PA) have just over 40% enrolled. Group Plans, through unions and employer retirement plans, account for only 3.7 of 19 million enrollees. Marketing individual plans has the greatest upside potential. Investors are recognizing this opportunity and startups are circling these Seniors in advance of the larger firms.

Kaiser Family Foundation notes, “As this growth continues, it will be increasingly important to assess how well the Medicare’s current payment methodology, and the competitive model behind Medicare Advantage is working to enhance efficiency and hold down beneficiary costs and Medicare spending.” There are 57 million beneficiaries potentially impacted by these policies.

Interested in participating in this growth in Medicare Advantage as an Actuary? Contact Smith Hanley Associates’ Actuarial Recruiting Practice Lead, Rory Hauser, at or 203.319-4305.

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